Houston Plaintiffs Lawyer Indicted in Kickback Scheme

A Houston plaintiffs attorney and two insurance company employees were indicted by a federal grand jury Wednesday in connection with an alleged kickback scheme that involved millions of dollars in settlement proceeds from silicosis cases. Here’s the indictment, the press release from the U.S. Attorney’s office in Houston, and the story from the Houston Chronicle.

Todd Hoeffner, 42, of Hoeffner & Bilek and two claims managers for The Hartford, a Connecticut insurance giant, were charged with conspiracy and fraud. The U.S. Attorney’s Office in Houston is also seeking forfeiture of more than $8 million in fees and bribes allegedly collected by the trio.

Hoeffner, who is represented by Chris Flood of Flood & Flood, has pleaded not guilty. A spokesman for The Hartford could not be reached.

Here’s what happened, according to the DOJ: Hoeffner, attempting to settle in bulk roughly 1,000 silicosis lawsuits he brought against companies, met with insurance agents for the companies in February 2002. The Hartford agreed to pay Hoeffner more than $34 million to settle the cases, but as part of the deal, two Hartford employees allegedly agreed to receive a total of more than $3 million and each a new BMW. Hoeffner collected more than $5.3 million in legal fees.

“There is a presumption of regularity and legality in the business of insurance litigation, which, when corrupted, damages our confidence in the integrity of the system,” said Don DeGabrielle, the U.S. Attorney in Houston. “These allegations . . . represent a serious affront to the lawfulness we expect during the settlement of insurance claims.”

Lawyers involved in the litigation expressed surprise over the charges. The Hoeffner case came before silicosis litigation became so controversial (click here for background from NPR). Said Dallas attorney Steven Russell to the Chron: “I had cases with Todd, and it was like having cases with any other plaintiff lawyer. It was always on the up and up. There was nothing ever suggested, no wink-wink here or there. So yes, I am surprised. This is almost like a John Grisham novel.”

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